Does Democracy Make You Happy? Multilevel Analysis of Self-rated Happiness in Indonesia | SUJARWOTO | Jurnal Studi Pemerintahan: Journal of Government and Politics 1169 3348 1 PB

Does Democracy Make You Happy?
Multilevel Analysis of Self-rated
Happiness in Indonesia
SUJARWOTO
Department of Public Administration, Universias Brawijaya, Malang, Indonesia.
Email: sujarwoto@ub.ac.id

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ABSTRACT
The linkage between democracy and citizen happiness in developing countries is
rarely examined. This study examines the link between democracy and citizen happiness in Indonesia, a new emerging democratic country in South East Asia. Data
comes from the Indonesian Family Life Survey 2007 (Nindividual = 29.055; Nhousehold =
12.528; Ndistrict = 262) and the Indonesian Family Survey East 2012 (Nindividual =
5.910; Nhousehold = 2.546; Ndistrict = 55). Results from a three-level ordinary logit
model show that democracy as measured by age of direct local democracy is not
associated with citizen happiness. Instead of age of direct local democracy, district
community social capital and spending public services give benefit for citizen happiness. The results are robust against individual and district characteristics related
to happiness. The results highlight the importance of promoting community social
capital and improving district capacity in delivering public service to improve citizen
happiness in Indonesia.
Keywords: democracy, happiness, three-level ordinary logit model, Indonesia

INTRODUCTION

During the last two decades, citizen happiness has become an
important development agenda in Western countries, particularly
rich countries across Europe and North America (Argyle 2001;
OECD 2013). The economic crisis in Europe and United States at
the end of 2009 have realised that economic welfare or GDP is not
the only ultimate goal of development. The government and lead-

Recieved 11 September 2015; Accepted 07 September 2015
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ers in these countries have realised that citizen happiness and life
satisfaction are more importance. Since 2008 therefore, government
and policy makers across European countries have promoted happiness as an indicator to measure national development progress.
France and United Kingdom for example have included happiness
in their national wellbeing index. The International development
organisation such as OECD has also used this indicator for measuring social and development progress in their development program
(OECD 2013).
Studies to understand citizen happiness and its factors in Western Europe and United States have been widely documented. Among
them conclude that democracy is an important factor of citizen

happiness (Frey & Stutzer, 2000; Argyle 2003; Blanchflower &
Oswald 2004; Lane 2009). Frey and Stutzer (2000) found that local
autonomy and direct democracy both increase citizen happiness,
and they suggested that this positive effect could be attributed to
two factors: local citizens’ feeling of being more closely connected
to political outcomes, and the benefits of political participation.
However, Veenhoven (2000) found that political and private freedoms exert a positive influence on subjective wellbeing only in countries with well-established democracies. In emerging democratic
countries, the linkage between democracy and subjective wellbeing
or happiness is still little known.
This study examines the linkage between democracy and citizen
happiness in Indonesia. The country is an emerging democratic
country in South East Asia as its authoritarian political system was
radically reformed in 1999. Since 1999, free and fair national, central elections of parliament and president have been introduced
across the country. More than forty new political parties participated in this direct election which, coupled with new media openness, supported a burgeoning country-wide democracy (National
Election Committee 2004). From then onwards, citizens experienced
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increased freedom to make their voice heard through the press, over
which the government has continued to relax its control. Moreover,
in 2001, Indonesia embraced local autonomy, a move which transformed the country’s local government political system. Local autonomy has given every district or local government the power to
perform the key functions of state, including the provision of health,
education, environmental and infrastructure services. Further reforms in 2005 allowed citizens to elect their own mayor and parliament through direct local elections: by the end of 2006, more than
half of all districts had conducted direct elections (The Ministry of
Home Affair 2007). All these national and political reforms may
affect people’s lives and their happiness across archipelago.
This study contributes to existing literature on democracy and
happiness in the following ways. First, it combines insight from two
strands of earlier research on contextual and individual factors of
citizen happiness in developed countries (Argyle 2003; Blanchflower
and Oswald 2004; Diener and Biswar-Diener 2008; Graham 2009;
Lane 2009). Second, by focusing on Indonesian local democracy,
this study provides a contrast to the far more extensive work on
happiness and wellbeing that draws on data from developed countries and Western country settings (especially the UK, US and Western Europe). Third, prior studies examining the linkage between
democracy and citizen happiness used either aggregate data at the
individual level (see for example Frey and Stutzer 2002) or ignore
the nested structure of data (see for example Bjornskov et al. 2008).
It is crucial to distinguish the individual-compositional sources of
variation from the place-contextual ones in order to minimize confounding (Subramanian et al. 2001). The three-level ordinary logit
model used in this study is able to account for the clustering of
individuals within households and districts by separating their variance in happiness from the household and district variance (RabeHesketh and Skrondal 2012). Using this model is thus most approhttp://dx.doi.org/10.18196/jgp.2016.0021 26-49

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priate for examining the effects of individual and contextual sources
of happiness on citizen happiness.
THEORETICAL FRAMEWORK

Social scientists have long been interested in the study of how
and why people are happy and unhappy; they do so by identifying
factors associated with happiness. The findings of previous studies
suggest that the factors contributing to happiness fall into two broad
categories: contextual and individual. Contextual sources of happiness pertain to factors at the community and state level such as
democracy, social capital, better environment, good government and
per capita GDP (Argyle 2003; Blanchflower and Oswald 2004; Lane
2009). Individual sources of happiness pertain to the socio-demographic characteristics of individuals and their unique economic
circumstances. The individual sources include gender, age, marital
status, companionship, social ties, religiosity, health, employment
status, education and personal or household income (Argyle 2003;
Diener and Biswar-Diener 2008; Graham 2009). Figure 1 shows
the interrelationships among contextual and individual sources of
happiness. The model allows for an interaction effect between individual and contextual factors in the production of happiness.

FIGURE 1: INTERRELATIONSHIP BETWEEN INDIVIDUAL AND CONTEXTUAL SOURCES OF HAPPINESS

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Contextual sources of happiness have been a consistent topic of
interest for sociologists, economists and political scientists. Research
shows democracy, social capital, better environment, good government and GDP to be good predictors of happiness. Frey and Stutzer
(2000) found that local autonomy and direct democracy both increase happiness, and they suggested that this positive effect could
be attributed to two factors: local citizens’ feeling of being more
closely connected to political outcomes, and the benefits of political participation. However, Veenhoven (2000) found that political
and private freedoms exert a positive influence on subjective
wellbeing only in countries with well-established democracies.
Rodriguez-Pose and Maslauskaite (2012) found that good government as measured by its capacity to deliver public services is positively associated with citizen happiness. Bjornskov et al. (2008) found
that the higher performance of economic and judicial institutions
affects happiness in medium- and high-income countries. Studies
have also shown the benefit of community social capital for individual happiness (Putnam 1995; Bjornskov 2003). Putnam (1995)
explained that social capital provides a channel for the personal
and social support that increases individual happiness. Mookerjee
and Beron (2005) find that religious fractionalization is associated
with reduced happiness. Thao et al (2009) argue that ethnic diversity may relate with less happiness. Some scholars have also found
that higher GDP increases citizen happiness. Corruption has a detrimental effect on happiness (Bjornskov et al. 2008). Di Tella et al.
(2003) and Helliwell et al. (2013), among others, have shown that
people who live in countries with higher GDPs have higher levels of
happiness.
Individual sources of happiness have been identified by most
psychologists and economists. Studies have found gender, age, marital status, health, companionship, religiosity, social ties, employment
status, education and personal or household income to be predichttp://dx.doi.org/10.18196/jgp.2016.0021 26-49

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tors of individual happiness. Women tend to be happier than men
(Graham 2009); one somewhat contentious explanation for this is
that women tend to have lower levels of aspiration and, thus, a higher
level of happiness (Frey and Stutzer 2002). Age is positively associated with happiness, with older people likely to be happier than
younger people (Argyle 2001). Blanchflower and Oswald (2008)
posited a U-shaped relationship between age and happiness, demonstrating that both younger and older people tend to be happier
than middle-aged people. Marital status and companionship are
consistent predictors of happiness, with married individuals and
individuals in a partnership likely to be happier than widowed and
divorced individuals (Blanchflower and Oswald 2004); loneliness
has the effect of decreasing happiness (Lane 2001). Religiosity and
social ties are also sources of individual happiness. Abdel-Khalek
(2006) found that people who are religiously devout tend to enjoy
not only better mental health but also higher levels of happiness.
Helliwell (2006) found that social ties are one of the main factors of
subjective wellbeing. Physical health is a stable predictor of happiness; a healthy individual is likely to be happier than an unhealthy
individual (Graham 2009). Employment is positively associated with
happiness, with employed people likely to be happier than those
who are unemployed (Clark 2003); unemployment has a detrimental effect on happiness (Clark and Oswald 1994). Prior studies also
show that education may contribute to happiness by enabling individuals to better adapt to a changing environment (Clark and Oswald
2004). Household and individual incomes are consistent predictors of happiness (Lane 2003; Blanchflower and Oswald 2004).
RESEARCH METHOD
INDONESIAN FAMILY LIFE SURVEY (IFLS) AND OFFICIAL
STATISTICS

To examine the linkage between democracy and citizen happihttp://dx.doi.org/10.18196/jgp.2016.0021 26-49

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ness in Indonesia, we assembled individual and district level data
from various sources. In this analysis, the data possesses a multilevel structure, with individuals nested within households and districts. Data on individuals and households is taken from IFLS 2007
and IFLS East 2011, while district data comes from Indonesian Village Potential Census (PODES), Indonesian Population Census, and
official statistics.
Our analysis used the IFLS 2007 and IFLS East 2012 as the happiness question was first asked in both surveys. The sample in the
surveys was restricted to respondents aged 15 years and older who
gave complete information on the happiness question. The IFLS
2007 sample included 29,055 individuals from 12,528 households
living in 262 districts, which corresponds to approximately 99% of
the IFLS 2007 sample included in the happiness module. On average, there were 4-5 individuals within each household and 100 households within each district. The IFLS East 2012 sample included 5,910
individuals from 2,546 households living in 55 districts, which corresponds to approximately 99% of the IFLS 2012 sample included
in the happiness module. On average, there were 2-3 individuals
within each household and 70-100 households within each district.
The IFLS data was linked to a number of other surveys and official statistical datasets using district codes. First, we linked the IFLS
data with the local and national election database of the Indonesian Ministry of Home Affairs as the data contains information
about districts that by 2007 had elected their major and local parliament through direct election. Next, we linked it with the government Village Potential Statistics (PODES) 2006 and 2011. PODES
contains detailed information about the incidence of local conflict
and violence as well as the number of community groups within
districts, calculating aggregates at village and urban neighbourhood
levels to measure their distribution. Third, we linked the IFLS with
the ethnic and religious fractionalisation index measured from the
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Indonesian Population Census 2010. Fourth, we linked the IFLS
data to district fiscal data. Collected by the Ministry of Finance,
this dataset provides information about district spending for public
services (Indonesian Ministry of Finance 2008). We use fiscal data
from 2006 and 2011 (the year prior to the IFLS survey), as district
development spending in the Indonesian budgeting system takes at
least one year to take effect.
MEASURE OF DEMOCRACY AND CITIZEN HAPPINESS

Democracy is measured by age of district direct election. It assumes that districts which have older age of local democracy have
more mature democracy than district with younger age. Citizen
happiness is measured by self-rated happiness (Veenhoven 1984).
In the IFLS survey, respondents were asked: “Taken all together,
how do you feel these days: ‘very happy’, ‘pretty happy’, ‘not too
happy’ or ‘very unhappy’?” This item has been widely used and has
been validated during use in previous studies (Frey and Stutzer 2002;
Krueger and Schkade 2008; Oswald and Wu 2011).
CONTROL VARIABLES

Control variables include contextual and individual/household
factors of happiness. Contextual factors include district GDP, community social capital, spending for public services, local conflicts
and violence, ethnic and religious fractionalisation. Following
Putnam (1993), we use the density of community groups active in a
district to measure social capital. This provides information about,
among others, kelompok pengajian and kelompok kebaktian (religious
groups), karang taruna (youth groups), persatuan kematian (funeral
groups), and kelompok wanita (women’s groups), all active community groups found within villages or urban neighbourhoods in Indonesia. We use district spending for public services to measure
district capacity to deliver public services. To address whether local
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conflicts and violence affect happiness, we include number of local
conflicts and violence in the estimation. Ethnic and religious
fractionalisation were measured as one minus the Herfindahl index of ethnic or religious group shared, and reflected the probability that two randomly selected individuals from population belonged
to different groups (Alesina et al. 2003). Individual and household
factors of happiness are also included for control variables. Individual factors of happiness were selected from prior studies. These
individual factors include age, gender, per capita household expenditure, poverty status, years of schooling, employment status, marital status, health, social ties, trust, ethnicity, religiosity and social
participation, loneliness, parental status, and migration. Meanwhile,
household factors include household expenditure, household location in an urban or in a rural area and household size.
THE THREE-LEVEL ORDINARY LOGIT MODEL

A three-level ordinary logit model is used to account for individual, household and district characteristics on citizen happiness.
This model is more appropriate than the use of Ordinary Least
Squared (OLS) regression, which aggregates data at the individual
level and ignores the nested structure of data; if ignored, this nesting of individuals within household and district units can lead to
the underestimation of standard errors regarding the effect of household and district characteristics (Snijders and Bosker 1999). One
consequence of failing to recognise hierarchical structures is that
standard errors of the regression coefficient will be underestimated,
leading to an overstatement of statistical significance. Standard errors of the coefficient of higher-level predictors will be the most
affected by ignoring the grouping as does OLS estimation.
Three-level ordinary logit model, or multilevel, analyses combine
the regression and the variance component models to account for
the nested structure of the data. This model accounts for the clushttp://dx.doi.org/10.18196/jgp.2016.0021 26-49

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tering of individuals by separating individual variance in happiness
from that of household and district variance in happiness. The total variance is partitioned into the variance between households
and districts (ó2µ) and the variance within households and districts
(ó2e). These variances capture the effects of unobserved heterogeneities, variables that are independent of the covariates in the model
(Rabe-Hesketh et al. 2012). We carried out three-level ordinary logit
models with generalised linear latent and mixed models commands
(GLLAMMs) using Stata 13.0 software. Rabe-Hesketh et al. (2004)
explained that GLLAMMs are a class of multilevel latent variable
models for (multivariate) responses of mixed type, including continuous responses, counts, duration/survival data, dichotomous,
ordered and unordered categorical responses, and rankings. In this
analysis, GLLAMM is used with an ordinal logit link as the dependent variable (self-rated happiness) is ordinal. For each of the models, the estimated coefficient, standard errors, individual, household and district variances, and log likelihood as an indicator of
model fit are reported. All models were estimated using maximum
likelihood estimation.
FINDINGS

First, we describe the district characteristics of the survey. The
surveys reflect the contrast in socio economic development between
western and eastern Indonesia, particularly concerning GDP, spending for public services, ethnic and religious fractionalisation, social
capital and age of democracy. As IFLS East was collected in 2012,
the age of local direct democracy in eastern Indonesia is longer.
Levels of district GDP and spending for public services in eastern
Indonesia are greater than in western Indonesia. Community social
capital in the eastern region is substantially greater than in the western region. Ethnic and religious fractionalisation in eastern Indonesia is higher than in western Indonesia. Poverty as measured by
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percentage of households with consumption of less than 2 USD
per day is fairly similar in both regions; poverty in the eastern region is slightly higher at 68%.
The mean self-rated happiness score was 3.00 (SD = 3.55-3.58)
for both samples, measured on a 1 (very unhappy) to 4 (very happy)
scale. Consistent with the Ipsos 2010 and the 2012 Happy Planet
Index results, most respondents in the surveys report happy and
very happy (94% for IFLS 2007 and 88% for IFLS East 2012). The
detailed of socio-demographic variables in both samples are shown
in Table 1.
Bivariate ordered logistic regression in Table 1 shows that most
variables were statistically significantly associated with happiness at
the 5% level. However, age of local democracy is not significantly
associated with citizen happiness. Ethnic fractionalisation, community social capital and spending for public services are strongly related with happiness. Religious fractionalisation and GDP have a
weak correlation with happiness. Local conflict and violence are
negatively associated with citizen happiness. Only a small number
of observations were missing. With the relatively small amount of
missing data, it is expected that bias and efficiency loss in the estimation of the multivariate models are minimal.
Table 2 shows results of the three-level ordered logit model. To
examine the degree of variance in citizen happiness at the individual,
household, and district levels, we estimated an empty model before
regressing happiness on any predictor. The empty model includes
only variance components; it is not reported in the tables. It revealed that the unexplained individual variance in citizen happiness is 0.049, the unexplained household variance in happiness is
0.038, and the unexplained district variance comes to 0.007. Thus,
the intra-class correlation (ICC) for individuals within a household
is 0.124; for individuals within a district the ICC is 0.101. This means
that 12.5% of the variation occurs between households and 10%
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TABLE 1 SAMPLE CHARACTERISTICS AND BIVARIATE ORDERED LOGISTIC ANALYSIS

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occurs between districts; ignoring this can lead to inefficient and
biased estimates.
Across the models, democracy is not significantly associated with
citizen happiness (0.020, *p >5%). The widespread local conflict
and violence following democracy and decentralisation in the local
level have detrimental effect on citizen well-being. The negative association of local conflicts and violence on citizen happiness is consistent in the models. The negative association between district GDP
and citizen happiness indicates the paradox of economic growth in
the country archipelago. This finding signals that district economic
development does not go with citizen happiness. As districts across
Indonesia are rich with community social capital, this community
social capital gives benefit for citizen well-being. Individuals who
live in district with richer community social capital are happier than
those who live in district with poorer community social capital. Instead of age of direct local democracy, the capacity of district governments in spending for public services gives benefit for citizen
well-being. Across the models, spending for public services is significantly associated with happiness. Studies also report that higher
ethnic fractionalisation across the Indonesian archipelago often leads
to ethnic conflicts, which have detrimental effect on citizen wellbeing (Kaiser and Hofman 2003; World Bank 2006; Baron et al.
2009). The negative association between ethnic fractionalisation and
citizen happiness is shown in this study.
Most of the individual and contextual factors show consistent
results with existing studies. Being married, being healthier and
richer, being educated and employed, being religious, and having
social ties are source of happiness in the individual and household
level in Indonesia. However, happiness is beyond ethnicity and religious affiliation. The findings indicate that basic sources of citizen
happiness in the country are the same regardless of ethnic and religious differences. Age is positively associated with happiness. Marhttp://dx.doi.org/10.18196/jgp.2016.0021 26-49

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TABLE 2: REGRESSION RESULTS OF THREE-LEVEL ORDERED LOGIT MODEL

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ried individuals are happier than divorced and widowed individuals. Women are happier than men are. Richer household is happier
than poorer household. Employed and educated individuals are also
happier. Support and good social relationship benefit for happiness. Consistent results are shown from the association of social
ties, trust and social participation on happiness. In contrast, loneliness and childlessness have detrimental effect on happiness. Religious individuals are happier, but religious affiliation is irrelevant.
Ethnicity affiliation is also irrelevant. In all models, we found being
Muslim and being Javanese are not significantly associated with
happiness. The null association of being Javanese is not surprising
in that little ethnic discrimination, whether de jure of de facto, has
existed in modern, independent Indonesia. Some studies argue that
Chinese have been discriminated against Javanese in Indonesia, but
considering their large wealth, they are not so much discriminated
against as envied (Suryadinata et al. 2003). The significant association of urban residence and happiness is only shown for eastern
Indonesia.
The variances at the household and district levels are significant
across all specifications. The estimation of these works towards ensuring the remaining estimates is robust against unobserved household and district heterogeneities. Single-level studies, which ignore
unobserved heterogeneities at either the household or the district
level, may not be as robust. This is worth bearing in mind when
comparing these results with those discussed in the current literature.
DISCUSSION

This paper examines the linkage between democracy and citizen
happiness in Indonesia. Indonesia provides an interesting case not
only because recent findings show the country to be one of the
happiest in the world but also because relatively little research has
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explored to examine the relationship between current local democracy development and citizen happiness in the country.
The main findings show that democracy as measured by age of
local democracy is not associated with citizen happiness. Instead of
democracy, community social capital and district capacity in delivering public services are district factors of citizen happiness. The
null association of local democracy on citizen happiness may indicate ineffectiveness of local democracy in the country. Ineffectiveness of local direct democracy has been noted by some studies.
Aspinall and Mietzner (2010) note the influence of political elites,
patronage and ‘money politics’ in local elections. Local democracy
in Indonesia has also been accompanied by an increasing amount
of local conflict, which has not only rendered local democracy less
effective (Choi 2004; Nordholt and Van-Klinken 2005), but which
is also in itself detrimental to citizen happiness (Sujarwoto and
Tampubolon 2014). Under such conditions, the widening participation of political parties and local direct elections may not guarantee effective local leadership, which can provide better local policies
and services, which improve wellbeing. The pessimism of citizens
on effectiveness of local democracy to bring effective local leadership was also indicated from the increasing number of non-voters
in local elections since political reform from 20% in 2005 to 40%
in 2013 (The Ministry of Home Affairs 2014).
Although some qualitative studies report such local conflicts were
also related to religious tension (Suryadinata et al. 2003; Klinken
2007; Choi 2004), we do not find significant relation between district religious fractionalisation and citizen happiness. Religious affiliation is also not significantly associated with happiness. Similar
finding were also shown by the studies of Ferriss (2002) and Sohn
(2013). They find that the levels of happiness differ little among
Muslims, Protestants, Christians, Catholics and Jews. In our study,
the effect of religion on happiness is shown in the form of indihttp://dx.doi.org/10.18196/jgp.2016.0021 26-49

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vidual religiosity. We find those who do daily prayers are happier
than those who do not do daily prayers. Further, the positive association between religious fractionalisation and individual religiosity
may signal the way individual religious freedom is expressed and
associated with citizen happiness, as suggested by some scholars that
the majority of Indonesians harbour tolerant and friendly towards
other faiths, especially in the context of the wider Muslim world
(Pizani 2014).
Indonesia is a society in transition, but retains many traditional
features. Ethnicity still plays important roles in citizen’s daily life
and therefore may influence citizen happiness (Ricklefs 2001;
Suryadinata et al 2003). The importance of ethnicity on happiness
is shown in this study. In all models, we find that citizen who live in
district with higher ethnic fractionalisation are less happy than those
who live in district with less ethnic fractionalisation. The negative
association of ethnic fractionalisation may relate with increasing
conflict and violence in high ethnic fractionalisation districts in
Indonesia since 1998. Nordholt and Van-Klinken (2005) for example
show that increasing conflict involving ethnic groups since the fall
of the authoritarian regime in 1998 mostly occurred in districts with
high ethnic fractionalisation such as Maluku, Kalimantan, and
Papua. Ethnic fractionalisation in conflict districts in those islands
resulted in social tension and reduced social tolerance, which may
also make citizen less happy.
The benefits of indigenous community social capital across Indonesia archipelago such as kerjabakti (voluntary labor), arisan or
binda (rotating credit association), kelompok pengajian and kelompok
kebaktian (religious groups), karang taruna (youth groups), persatuan
kematian (funeral groups), and kelompok wanita (women’s groups)
on various aspects of citizen well-being were documented in prior
studies. Miller et al. (2006) for example found that these type of
community social capital benefits mental health among adults in
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Indonesia. Beard (2007) shows the positive role of this indigenous
tradition in improving community well-being. Sujarwoto and
Tampubolon (2013) explain some benefits of community and individual social capital for well-being, which include support from community and family members, better access to public services and
amenities, and sharing knowledge and information. Such channels
may link the positive association of social capital and citizen happiness in Indonesia. For example, the importance of family and
community support in improving well-being was highlighted in the
recent BPS 2013 survey, which found that time spent with family
and neighbours are among main factors of household happiness in
Indonesia (BPS 2014).
The association between spending for public services and citizen
happiness signal that happiness in the country is increased through
better capacity of district government to deliver public services. Using
the IFLS 2007, Sujarwoto and Tampubolon (2014) found that fiscal
decentralisation in Indonesia is significantly associated with citizen
happiness. Bjørnskov et al. (2008) explain mechanisms by which
fiscal decentralisation leads to citizen happiness. They find that it
encourages local governments to provide citizens with the public
goods and services that they need. It entails a shift in political decision-making from central to local government, with the implication
that local government has a greater potential to tailor its policies
specifically to the demands of local citizens. This improved matching of public goods and service delivery to local needs necessarily
increases happiness levels of the beneficiaries.
Indonesians living in richer districts as indicated by higher GDP
are less happy than those living in poorer districts. This negative
association contrasts with previous cross-country analyses, which
have shown a positive association (Di Tella et al. 2003; Clark and
Senik 2011). In the literature of happiness, this phenomenon is
often called the growth paradox (Graham 2009). This enigma may
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be explained by the fact that districts with higher GDP tend to experience higher levels of economic growth. Recent studies on Indonesian economic development indicate that despite high growth rates
between 2005 and 2011, economic inequality has deepened (Yusuf
et al. 2014). The Asian Development Bank (2012) and Euromonitor
(2012) report that Indonesia has experienced the highest increases
in income inequality levels in the world in the past few years (rising
from a Gini coefficient of 0.33 in 2005 to 0.47 in 2011); districts
with the highest GDPs also have the highest levels of economic
inequality (World Bank 2008). Based on the National Survey Data
1993-2013, Yusuf et al (2014) show the rise in inequality was predominantly visible in the period after the 1999 crisis, or era of political reform and democratisation. This increase of inequality in
richer districts may explain why citizens living in richer districts are
less happy.
CONCLUSION

In Indonesia, the quality of district administration seems to be
more important for citizen wellbeing than the provision of local
democracy and the freedoms it implies. This study found that citizens report being happier when their district authorities prove themselves more capable of providing better public services and promoting community social capital. Providing better policies and services
that can ensure adherence to basic norms of equity and fairness, as
well as promoting social support and collective culture, are essential
to increasing citizen happiness in the country. The importance of
the role of districts in improving citizen happiness across archipelago
is clearly paramount and should not be underestimated by government and policy makers.
The findings have an important implication both for theory linking democracy and citizen happiness and local democracy practice
in developing countries. The null association between democracy
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and citizen happiness in Indonesia is in contrast with findings in
the Western Europe and United States which show strong relationship between democracy and happiness (Frey and Stutzer, 2002;
Lane, 2009). This contrasting findings imply that theory linking
democracy and citizen happiness in developing countries may have
different pathways. In the context of developing countries, local
democracy will benefit for citizen happiness if political participation and freedom can be translated into better public services and
more cohesive and safer community. From a policy perspective therefore, politicians and government should notice that the ultimate
goal of democracy is not enlarging political participation and freedom but achieving citizen wellbeing or happiness through providing better policies and services as well as through promoting social
support and collective culture.
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